Gold prices witnessed a sharp crash of around 20 per cent over the last two days, as extreme volatility gripped the commodity markets, according to data from the Multi-Commodity Exchange.
Gold prices continued their decline on Sunday, the budget day, with 24-carat gold on the MCX falling to Rs 1,36,185 per 10 grams. The precious metal had opened the session at Rs 1,46,800 per 10 grams, reflecting sustained selling pressure and sharp intraday swings.
Gold prices have become highly volatile, with sharp price swings in recent sessions. On Saturday, gold had already seen heavy pressure, closing lower by around 5.4 per cent at Rs 1,69,470 per 10 grams for 24-carat gold in the domestic commodity market.
The weakness was also visible in global markets, where international gold prices declined by over 9 per cent to USD 4,887 per ounce, adding to the pressure on domestic prices.
Selling pressure extended to the silver market as well. Silver prices on the MCX declined to Rs 2,65,900, marking a fall of around 9 per cent in a single-day session on Sunday. The sharp correction came after strong weekly gains seen over the past two months.
Market experts said a large number of investors had entered gold and silver trades over the last two months, attracted by the sharp and consistent price rises. These gains were partly driven by leveraged positions, which benefited from weekly increases in gold and silver prices.
Ajay Bagga, Banking and Market Expert, told ANI, “The meltdown of Jan 29th/30th would have hurt these positions. Long-term investors, who are Indian households, will continue to hold. But let us keep the discourse measured and avoid the leverage. “I told you so” tones of talking down to those who were caught in levered trades and are sitting on unsustainable losses.”
Underlying long-term factors such as central bank buying, debasement of fiat currencies, government fiscal deficits, and rising demand for silver from the EV, AI, and renewable energy sectors remain intact.
Bagga cautioned that no one can accurately forecast short-term price movements, adding that the recent fall wiped out nearly two months of gains in just two days, an outcome few had anticipated.
While speculation exists around large institutional activity triggering the fall, experts said such theories remain unverified.
Investors were advised to maintain a measured approach, remain polite towards those facing losses, and reassess their asset allocation.
Bagga suggested that investors with a 10-15 per cent portfolio allocation to gold and silver may continue to hold, while those uncomfortable with volatility could consider liquidating their positions.
Commodity market downturns can be prolonged, but holding over a reasonable period may still deliver satisfactory returns, and short-term noise should not distract investors from long-term financial goals. (ANI)
